In late June 2006, the Department of Statistics (DOS)
revealed that the poorest one-third of households in Singapore got poorer
over the last 5 years [1] In the same period of
time, the richer households had increased monthly income, by quite
significant jumps.

The survey was based on "Singapore
residents".

These numbers proved what many Singaporeans could see with their own
eyes: income inequality has been growing. The statistical measure of
inequality is the Gini co-efficient, which stood at 0.490 in 2000, but
rose to 0.522 in 2005.

The Gini co-efficient can vary from 0 to 1. The closer the co-efficient
gets to 1 (which of course is very extreme, because it means that 1 person
has everything and everybody else has none), the more unequal is the
distribution of whether we wish to measure.

Another word I need to explain we go on is "decile". This
means a subgroup comprising 10% of the population, in this case, the
population of Singapore residents, who were the subject of the DOS'
survey. Altogether there are 10 deciles in the population, and we usually
refer to the poorest as the first decile, with the richest as the 10th
decile.

Below is the table of the hard numbers, with specific comments
below:

General Household Survey 2005

Monthly
household income

Increase
over
5-year period

Annualised
increase

Decile

Yr
2000

Yr
2005

($)

(%)

(%)

1st

$
90

-

-

-

-

2nd

$
1,470

$
1,180

-290

-19.7

-4.3

3rd

$
2,250

$
2,190

-60

-2.7

-0.5

4th

$
2,950

$
2,990

40

0.1

0.3

5th

$
3,660

$
3,850

190

0.5

1.0

6th

$
4,470

$
4,840

370

8.3

1.6

7th

$
5,390

$
5,890

500

9.3

1.8

8th

$
6,520

$
7,260

740

11.3

2.2

9th

$
8,270

$
9,300

1,030

12.5

2.4

10th

$
14,360

$
16,480

2,120

14.8

2.8

-- Source: Department of
Statistics

The first decile mostly comprised households without income. In year
2000, it was reported that 8.7% of households had no monthly income,
presumably because nobody had work. They thus made up 87% of the first
decile, pulling down the average monthly income of that decile to a mere
S$90 per month.

In 2005, the percentage of households without any monthly income
increased to 10.1%. Thus, all of the first decile now had no income.

The second decile had an average household income in 2000, of S$1,470
per month. By 2005, this had fallen to $1,180. The DOS, in its press
statement said that this represented an annualised percentage decline of
4.3%. It didn't highlight -– nor did the Straits Times or Business Times
[2] -– that cumulatively, over 5 years, this decile saw their monthly
household income fall by nearly 20%. These Singaporean families had $290 less per month in 2005
compared to 2000.

The income figures exclude any hand-outs given by the government.

In this period, the consumer price index (CPI) rose an average of 0.6%
a year. However, sometime earlier, I had seen a report (which I didn't archive
then)
that said that the CPI underestimated the inflationary increases for the
things that lower-income households spent on, e.g. electricity and public
transport. The nation-wide average CPI was moderated by falls in the auction prices of the
Certificates of Entitlements for cars[3], a benefit only the
better off enjoyed.

The third decile also saw a reduction in monthly household income.
Their average fell from $2,250 in 2000 to $2,190 in 2005.

At the other end of the scale, the richest
10th decile of households saw
their monthly household income increase from $14,360 in 2000 to $16,480 in
2005. In percentage terms, this represented an annualised increase of 2.8%
per year, the most accelerated increase of any decile. In cumulative
dollar terms, which no newspaper highlighted in their reports, this
decile's monthly household income leapt $2,120 over 5 years.

The DOS offered a number of possible explanations for the fall in
household income among the poorer deciles. It suggested that as the
population aged, more households were made up of retirees, and thus had no
income. However, since there were no detailed data on this, I couldn't
check how important this was as an explanatory factor.

It also mentioned that the decline in household incomes in the 2nd and
3rd deciles "was partly caused by the larger number of households
with retired persons and no incomes."

"It could also be partly due to the higher unemployment in 2005
than 2000 among the 2nd decile group and lower income from employment
among the 3rd decile group.

Some readers might wonder whether household sizes have been shrinking.
For example, if a household of 4 persons in 2000 with $5,000 income
together, had by 2005 split up into 2 households (of 2 persons each) with
$2,500 in each household, statistically, it may show a drop, but in actual
fact the individuals might not have seen any decline in the standard of
living (assuming inflation was zero).

The DOS reported that household sizes changed only marginally over the
same period. It averaged 3.7 persons in 2000, and 3.6 persons in 2005.

Of course, there is no reason to believe that household size changes
happens only among the poorer groups -- if poorer households shrink and
depress their average household incomes, why not richer households? -- so
we can more or less rule it out as a significant factor.

Well-known
blogger Mr Brown wrote a commentary a few days after the release of these
statistics, touching on the income gap and the ever rising cost of living.
This didn't go down well with the government. See the next article The inutility of speaking truth unto power.

Certificates of
Entitlement (COE) are permits allowing someone to own a motor
vehicle for 10 years. The government issues a limited number
(adjusted from time to time) based on their assessment of
Singapore's road capacity. Those interested in owning cars have to
bid for them.Return to where you left off